Posts Tagged “Managed Funds”

FundForum International 2010 - an overview

June 24, 2020

An Article by Beverly Chandler.

Beverly Chandler will be covering FundForum International 2010, 28 June - 2 July in Monaco

The European asset management industry had just earned a brief moment to draw breath and evaluate where it was at the end of the prolonged period of upheaval caused by the sub-prime crisis when, lo and behold, along came violent volatility caused by continuing fears of credit risk across Europe.

These spread from Greece, but panic is, as we have seen, contagious, and fears have threatened to spread through the Euro zones in Spain, Portugal, Ireland, and into the Sterling-led UK to any European country that has a cripplingly high level of national debt.

The sub-prime crisis sparked off other dramas. We appear to have forgotten Dubai and its many financial problems which have been swept under the UAE carpet but played its part in rocking financial markets earlier this year.

Against the backdrop of loss and indebtedness, we have our perennial Western problem of an ageing population.  The question of who will fund the retirement years of a population dominated by people retired, not working, has been at the heart of a push to achieve above average investment returns for at least 20 years. Our original pension model of today’s workers funding today’s retired was predicated on a healthy balance of the two, the current and ex-workforce.  Demographics have put paid to that.

And where perhaps before, saving a portion of your income as a matter of course was embedded in a national psyche that had come through two world wars and a great depression, saving went right out of fashion.  Particularly in the UK where there always seemed to be another easier source of capital available to give you that money in the bank feeling which fuelled the ‘I’m worth it’ generations into spending more than they earned, often borrowed at easy  interest rates.

Within the UK, that money came from the UK’s flourishing property market where everyone it seemed could buy a house, make a quick return on it and move on. In an even more extraordinary extension of that pattern, ordinary people with no background in property development or property investment could build up a portfolio of properties and let them at a profit to others who were just waiting to get onto the same cycle.

It is a truth universally acknowledged that savings rates need to go up, in every sense of the phrase – we need to save more but we also need to earn a greater reward for saving. While interest rates remain dismally low for savers, they need to look elsewhere for returns on their money.  Across Europe, despite the shock and awe and the volatility experienced by those invested in equities over recent years who experienced a massive loss, a massive rally and then quite a bit of both, many traditional fund groups have experienced net inflows over the last year.

We live now in a financial world where neither banks nor governments have the appetite or the resources to lend money any more. Net inflows into funds suggest that investors are choosing investment in funds to secure their futures.  Actively managed funds, achieving better returns than those available on deposit, are what is needed to encourage investors to save and to offer them returns that are worthy of that effort.  The investment industry in its widest definition is at a crucial point in this process and must step up and produce the returns that will secure the financial security of future generations.

About Beverly Chandler

Beverly Chandler has been a specialist financial writer for a number of years, writing for most of the trade press, a number of national newspapers and publishing a couple of books on the Hedge Fund industry.  She will be covering the FundForum International 2010 conference, producing a daily digest of the key outtakes from the event, and interviewing speakers & delegates about prevailing industry trends, their views of the future and why FundForum International is the “must attend” conference in the annual calendar.

Land of Milk and Honey but can it continue?

June 14, 2020

Jonathan Willcocks, M&G Investments will be speaking at FundForum International 2010 28 June - 2 July in Monaco

An interview with Jonathan Willcocks, Managing Director, M & G Investments

Speaking on the expert panel on the UK session entitled “Land of Milk and Honey but can it continue?”, Jonathan Willcocks, managing director of M & G Investments, feels that the UK market is still well placed for its asset management industry to thrive.

“The UK market has always been a savings market and there is an increasing burden on savings for retirement” he says. “The burden of paying for retirement by the state has become less of a factor because the state just doesn’t have the money to pay for it.”

For Willcocks, irrespective of how you save, most of it flows back into asset management. “It’s the Pentium chip inside” he says. “The asset management industry is the conduit of capital coming from those who need to invest and save and going to those who need the funding for developing their businesses going forward.”

Historically, that conduit was provided by a combination of capital markets, banks and the state, argues Willcocks. “But the banks and state sector no longer have the money to lend and, indeed, are unwilling to lend so the only key way to get money to those who need it is via the stock market  - so the outlook is very positive for asset managers as governments across Europe realise the importance of savings, moving the burden for providing for people’s retirement back onto individuals.”

The last two years of high volatility and dramas have not caused much of a loss of confidence in UK investors, according to Willcocks. “I have not seen a loss of confidence in UK investors” he says, “but across Europe, investors who came into investment relatively late, at the end of the 1990s have definitely had their confidence shaken but in the UK and the US we just haven’t seen that. Buying in the dip is in the UK mentality because of a longer history with investment – we are much more resilient in the UK.”

Evidence of this is that for M & G Investments years 2007 and 2008 saw net inflows. In fact every month since the sub prime crisis happened has seen net inflows at M & G. “A lot has been written in the media about a lost decade” says Willcocks, who says that while that may be true if you were investing in an index, actively managed funds have outperformed. “An actively managed fund from the top 10 of the UK All Companies sector over the last 10 years to the 31st of March 2010 has, on average, delivered a140 per cent return so it’s not a lost decade” he says.

The economic uncertainty certainly exists, says Willcocks. “It clearly resides and it is difficult to work through because you definitely have a debt burden that has moved from the corporate to the sovereign space and taxes going up can be deemed to be an economic dampener.”

However, Willcocks says: “You can do well if you invest in the right companies for the client.”

He is also bullish about the significant long term trend of power moving from west to east in the world which started at the beginning of the millennium. “You can buy Asian markets or companies that benefit from Asian trends” he says.

“As an asset manager whenever I look across UK and Europe, I realise that savings rates, the amount of money that people save, have to go up so it’s currently 4,5,6 per cent per household and it may go to 10 per cent and it won’t just sit on deposit with rates where they are at the moment. This is good business for the asset management industry.”

Turning to Fund Forum International 2010, Willcocks says: “I like Fund Forum because it’s where you get the greatest concentration of asset managers and distributors at one event so you can get a temperature check of the industry as a whole.”

Post Under: Asset Management

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